Guest column: City future at stake in pension dilemma

All Memphians should feel encouraged that our mayor and City Council are addressing one of the most serious threats to the financial viability of our city.

If we do not fix the city of Memphis’ outdated pension system everyone loses — and yes, we mean everyone.

The math is simple. Today, the taxpayers of Memphis owe more than $600 million in debt toward past pension obligations, according to city officials. While the amount of debt varies from one actuary to another, the bottom line is, we can’t afford it.

All estimates point to a problem, no matter which indebtedness number is being used by actuaries for the city, the Memphis Fire Fighters Association and the City Council.

The pension system needs to be modernized and reflect today’s new normal. The city’s HR department must contend with the complication of today’s workplace like any other business. This includes:

Longer life expectancies, which equates to drawing pensions longer.

Baby boomers retiring, which results in fewer people paying into the system.

And, the simple fact that most people no longer stick with the same employer for 10 years.

Without reform, taxes will increase. More of our taxes will go toward paying for pensions and pension debt rather than fighting crime and fires, blight, and keeping libraries and community centers open.

This crisis was not created by anyone currently in city government as this system was designed more than 60 years ago. A lot of things have changed in our city in six decades, and so must our pension system.

The principal role of the Greater Memphis Chamber is to break the cycle of poverty. With 40,000 unemployed Memphians, we must work harder to retain and attract good jobs. Controlling our debt is imperative to ending this cycle and creating more and better opportunities for all citizens.

New businesses will be reluctant to join our community if our debt load illustrates that we do not have our financial house in order. Not only that, we also risk losing current businesses that desire a financially secure city to call home.

Our job is to retain and attract good jobs, and, as businesses large and small, the chamber understands how difficult making changes to our employees’ benefits can be.

However, we must reform the current system to ensure those benefits are available when city retirees need them. Pensions themselves could be at stake without reform. Retirees in other cities have had to deal with the reality of their pensions being placed on the chopping block to bail out insolvent governments.

A defined contribution, instead of the current defined benefit system, will ensure vested employees (10 or more years of service) and current retirees receive the pensions they were promised as our government pays its bills on time.

Our public servants deserve to be a part of a system that is fiscally sound and responsibly managed.

Moving to a defined contribution, which is similar to a 401(k), is a fair system for everyone. We understand that change is always uncomfortable, but retirees and vested employees’ futures are at serious risk. They are counting on payments already promised to them, but not enough money has been set aside to pay them.

Those of us who are advocating change are not fighting against anyone. We are fighting for everyone’s future. Doing nothing is not an option.

We encourage you to visit www.reformmem.com, where you can easily e-mail or call your council member to encourage them to vote in favor of our future. Our City Council did not create this problem — but it can’t be fixed without their leadership.

Phil Trenary is president and chief executive officer for the Greater Memphis Chamber.